Learning the wrong lesson from Convergys

Whenever a call centre closes somewhere in Atlantic Canada inevitably I will get an email roughly similar to “I told you so”. There are lots of folks around that dislike efforts to attract industries to the region insisting that we need to “take care of our own” and focus on a “made in New Brunswick solution” (Bernard Lord slogan).

And every time I get these emails, I write a blog post with the reasons why that makes little sense.

Sure, Convergys’ business model changed and it closed another NS call centre. In fact, the region has lost thousands of call centre jobs over the past decade. It’s lost many thousands of manufacturing jobs, too. And it has lost thousands of jobs in small retail shops as the big box retail environment takes over. In fact, across the Maritimes every year thousands of jobs disappear across the entire economy as a result of market decisions. The federal government has shed 2,400 jobs since 2008 across Atlantic Canada. Where are the “I told you so” emails? is it a mistake to have federal government jobs in the region?

Between the early 1990s and the mid 2000s, the call centre industry was a source of a couple of million new jobs across North America. This region attracted a big chunk of them and it employed thousands of people and brought billions of dollars’ worth of income into the region. The industry has been transitioning since the mid 2000s in the face of offshoring and the rise of the Internet. This has hit the outsourcing companies such as Convergys the hardest. Internal call centres have not been hit as hard but they still are downsizing.

In New Brunswick there are still something like 15,000 people working in customer contact centres for firms such as ExxonMobil, RBC, Orange, The Cooperators, Air Canada and IBM. Most of these firms will be around for many more years but some will undoubtedly close – just like the hundreds of small businesses that close every year across the province.

The right lesson to be learned from Convergys is that we need to continue to think about how we can foster investment and job creation in our region. When one industry is downsizing, in a healthy economy others are rising. What should those new industries be? Community leaders need to understand that when a firm that was exporting such as Convergys closes, a big chunk of money that had been flowing into the local economy stops. That has ripple effects as other sectors of the economy from housing to retail services have a little less economic activity.